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Option Clips: Skyworks Solutions, General Motors, and Las Vegas Sands

Reviewing notable options activity on Skyworks Solutions Inc, General Motors Company, and Las Vegas Sands Corp.

by 6/3/2014 1:40 PM
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Three names seeing notable option activity today amid developing news and/or unusual price action are semiconductor concern Skyworks Solutions Inc (NASDAQ:SWKS), automaker General Motors Company (NYSE:GM), and casino bigwig Las Vegas Sands Corp. (NYSE:LVS). Here's a look at how today's option traders have been placing their bets on these three names.

  • Skyworks Solutions Inc (NASDAQ:SWKS) is up 5.6% at $45.47, and earlier notched a decade-plus high of $45.49, after the firm hiked its current-quarter guidance. The stock has enjoyed a pair of subsequent price-target hikes, and intraday options volume is running at nine times the average pace. While short-term options are in demand -- as evidenced by the stock's 30-day at-the-money (ATM) implied volatility (IV), up 2.1% at 28.7% -- it's the August and November series of options that have attracted notable attention. Specifically, it looks like one trader established short straddles at the August 45 and November 45 strikes, amid hopes for SWKS to stick close to $45 over the long term. The August-dated straddle was sold for a net credit of $5.20 per pair of options, while the November-dated straddle was sold for a net credit of $8 per pair of options. The breakeven rails of the shorter-term spread are $39.80 and $50.20 (strike minus and plus net credit, respectively), and are $37 and $53 on the longer-term spread, with risk mounting beyond these "safe zones." The credits represent the maximum profit, which will be achieved if SWKS ends at $45 upon expiration.

  • General Motors Company (NYSE:GM) is fractionally higher at $35.15, after the firm reported stronger-than-expected sales for May. However, investors remain cautious ahead of a recall analysis from former U.S. Attorney Anton Valukas, expected to hit the Street as early as this week. Overall option volume is running at twice the normal rate this afternoon, with calls and puts trading near parity. Among the most popular is the June 35 put, where roughly 8,700 contracts have changed hands. More than two-thirds of the puts crossed on the ask side, and IV ticked higher at the time of the biggest block trades, hinting at potential buy-to-open activity. If the puts are, in fact, being purchased to open, the speculators are expecting GM to backpedal south of $35 by the close on Friday, June 20, when front-month options expire. Should the stock remain north of the strike through the option's lifetime, risk is limited to the initial premium paid -- which isn't much, relatively speaking. The security's Schaeffer's Volatility Index (SVI) of 24% stands higher than just 19% of all other readings from the past year, suggesting GM's front-month options are inexpensive, from a historical standpoint.

  • Finally, Las Vegas Sands Corp. (NYSE:LVS) -- which will host its annual shareholder meeting tomorrow -- has surrendered 3.1% to $75.03, on reports of weaker-than-expected gambling revenue in Macau last month. Demand is on the rise for LVS' short-term options, as the equity's 30-day ATM IV has risen 5.4% to 26.7%. Garnering the most attention has been the June 72.50 put, where more than 3,300 contracts have traded -- nearly two-thirds on the ask side, hinting at buyer-driven volume. Assuming the puts are being bought to open, the speculators expect LVS to extend today's retreat and perforate $72.50 by the close on Friday, June 20. However, the equity's losses could be stemmed with help from its 200-day moving average, which was last seen in the $74 neighborhood, and contained LVS' pullback in mid-May.
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